CALGARY - Scarce water resources and rapid growth have collided head-on in Okotoks, where town officials aren't approving new subdivisions until they can acquire enough water licence allocations.

Water has always been a top concern for the town that relies on the tiny Sheep River southwest of Calgary.

Okotoks has capped future growth at 30,000 people, and it has strict rules about when and where residents can water lawns, as well as fines to enforce them.

The town itself isn't exactly running dry, but the population boom means Okotoks has nearly tapped out of licences for water use, with about 2,240 million litres allocated last year out of the 2,300 million available.

With developers of the next Okotoks subdivisions keen to start building houses this summer, town leaders say they're "cautiously optimistic" they can purchase available water licence room from surrounding rural landowners or licenceholders.

"In the meantime, we had to put a rider in the development agreements that if we were not successful, they would not be able to proceed (with developments)," Mayor Bill McAlpine said.

Some other communities in the Bow River region are a decade or more away from reaching the limits of their water availability. And back when the province still gave out new water licences, Calgary acquired enough allocation room to grow past two million people.

But few other communities have seen their population quadruple in two decades, as Okotoks has.

When it was smaller, the town was limited in the water allocations it could obtain from the province to accommodate long-range growth, said municipal manager Rick Quail

Aware that its water allocation was approaching the ceiling, Okotoks has spent years trying to broker water deals to ensure the town of more than 22,000 can keep growing toward that 30,000-person full build-out.

The current licence room would only get them to around 24,000 people, and the town has budgeted $3.75 million this year to secure extra water allocation.

Securing new licences is tricky in a province where trading for water rights is still in its infancy, with no set market price five years after the province stopped granting new licences within the fragile South Saskatchewan River basin.

Okotoks has researched more than 2,000 licenceholders and contacted dozens of them, said Quail.

"They're out there in terms of licences," he said.

"Are they out there in terms of receptive vendors? Not so much right now."

Calgary-based Apex Developments has spent $10 million on land and planning to begin building the first lots of a new Okotoks community this summer.

Now, the company is frustrated the project is being held up right before final subdivision approvals, chief operating officer Richard Priest said.

"We've spent a lot of time and money going through all the planning approvals and everything, and then we're told the next day, 'Oh, we don't have any water,'" Priest said.

Priest said he had believed there was enough water to go around until the 30,000 limit was hit, as did Moez Moledina of Tristar Communities, which had plans this year for 85 new houses and a light-industrial project.

"This definitely came as a tremendous surprise," Moledina said.

But there had been discussion about this looming possibility, and developers were paying levies into the town's fund for future water-licence purchasing, Quail said.

Alberta Environment won't free up extra licences for the needy municipality -- even though the town ranks among Canada's top water conservationists.

"Unfortunately, it's a very popular area and people want to live there, so developers are pushed there because that's where the money is," ministry spokeswoman Cara Tobin said.

"They're trying to balance that development, and that's the responsibility of the municipality. As a government, we've said this area has this much water, and that's it."

The town consumed 329 litres per person, per day last year, a 37 per cent cut from 1999 levels. Calgary's daily per-capita demand was 429 litres last year, but the city has a much larger commercial and industrial base.

Okotoks may be forced to cut deeper this year as a drought looms on the horizon. The snow pillow on the Sheep River and Highwood headwaters is about 55 per cent below average, Quail said.

That could force up water usage for things like irrigation -- putting Okotoks perilously close to hitting its limit, garnering it an Alberta Environment fine. To prevent that, the town may further tighten its outdoor watering restrictions for homeowners, Quail said.

Alberta communities have had to put the brakes on development due to water constraints before, but the problem has afflicted villages, generally not cities or towns the size of Okotoks, Tobin said.

Okotoks' struggle is often experienced by subdivision developers in rural districts like Rocky View, where it's not the municipality's role to find water for a project. Since the province closed the taps on new licences,

High River and its 12,000 residents is currently using 62 per cent of its water licence room, and won't need to seek more until it reaches 19,000, said Ty Stokes, the town's director of engineering and operations.

That could take one to three decades to happen, he added.

Strathmore, which started piping in treated water from Calgary this year, will need to acquire new licences as early as 2018, according to deputy chief administrator Linda Nelson.